October 13, 2008

Micron President Says Company Will Stay in Boise

by ssavage

By Hagadone, Zach

Editor's note: As reporters for the Idaho Business Review piece together different aspects of the Micron story, we are posting those pieces for the public to be aware of the latest development. This is the latest interview. A final story including all aspects will be posted later.

Micron President and Chief Operating Officer Mark Durcan said today's announcement that the company would shut down a major manufacturing line in Boise doesn't signify the beginning of a total departure from the Treasure Valley or that its business is failing.

"We're a big, big part of the employment base here in the Valley, we'll still be the biggest employer and intend to be for the foreseeable future," Durcan said in a phone interview.

"We like doing business here," he added.

The restructuring will discontinue manufacturing of the company's 200 millimeter NAND flash memory product in Boise, and with it will go about 1,500 local jobs. The company employs between 9,000 and 10,000 workers in Boise, and said it plans to cut a total of 15 percent of its global workforce over the next two years. Micron employs about 19,000 workers worldwide.

Durcan said the restructure was necessary in the face of a glutted memory market that has forced down prices and slashed profits.

"What's going on here in the Treasure Valley specifically is we have a situation where the product we've been developing is priced so far below manufacturing costs that even if the market recovers there's no way this ... (product) will ever be profitable for Micron in the future," Durcan said.

"This is something we have to do to remain competitive. It's not something we want to do by any means," he added. "Our strategy moving forward is to be the most competitive manufacturer in the world in the NAND and DRAM space and continue to add more differentiated products."

The company said the job cuts will begin with a voluntary program, with those opting to leave the company receiving six weeks of pay in addition to a severance package. All employees affected by the cuts will receive the severance package.

Durcan said Micron will retain its corporate headquarters in Boise and continue to manufacture DRAM wafers there. The restructuring is expected to cost about $60 million, but company officials hope next year's cash operating margin benefit will be more than $175 million. Micron has posted seven straight quarterly losses, and on Oct. 1 reported a fiscal year-end net loss of $1.6 billion on net sales of $4.8 billion.

"It's been a tough couple of years in the memory market, but we are among the strongest manufacturers of DRAM and NAND here in the United States. We're generating cash flow from operations unlike a lot of our competitors," Durcan said. "Micron is here to stay."